Mobe networks bag UK 4G for a steal - £1bn shy of Osborne's £3.5bn
BT, EE, Three, O2, Vodafone win spectrum licence auction, raise 10% of 3G's £23bn
The rights to use Blighty's 4G frequencies were today sold to UK operators, plus a BT subsidiary without national aspirations, raising a mere £2.3bn for the Treasury.
That's somewhat short of Chancellor George Osborne's expectations of £3.5bn. EE (which also operates the Orange and T-Mobile brands in Britain), Three, O2 and Vodafone all effectively bought licences to run next-gen mobile broadband services in the UK - the latter paying the most - putting the country on the path to a full-blown 4G rollout.
The auction has been rumbling on, in silence, for about a month, but this morning Ofcom announced who had paid for what and how much. The purchased radio bands will let all four national operators roll out national 4G coverage, but we won't see any new entrants shaking up the market.
What's the frequency, Kenneth?
EE, formerly known as Everything Everywhere, is already the UK's largest operator, is busy running 4G services early, and now holds considerably more spectrum than anyone else: it bought loads - 10MHz of prime spectrum in the old TV bands at 800MHz, and 70MHz at 2.6GHz to complement its existing holdings.
Three got its reserved 800MHz allocation (10MHz in size), which was one of those cordoned off the ensure the UK maintained four network operators, and declared itself happy with that given the lump at 1.8GHz it recently bought off EE.
Telefonica, which runs the O2 brand in Britain, was quite reserved, buying 20MHz in the prime 800MHz band, but nothing else, while Vodafone (which hitherto had broadly similar holdings to Telefonica) splurged on the same quantity at 800MHz along with 40MHz at 2.6GHz and 25MHz of the unpaired band at 2.6GHz too.
That unpaired spectrum was the most interesting. It can only be used with TDD (Time Division Duplex) phones with which UK network operators are unfamiliar - so there was the possibility they'd ignore the slot and let a new player in, but it wasn’t to be and Vodafone and BT will split it between them.
BT also took a significant chunk at 2.6GHz, but has been quick to quash any rumours of national aspirations, explicitly stating that it won't be building a national cellular network so some sort of femtocell and roaming deal would seem most probable.
All that lack of excitement led to relaxed bidding, with the total raised only hitting £2.43bn, a billion pounds less than was expected (and budgeted for in the last Autumn Statement) and half what the Treasury was really hoping for.
No one imagined the 4G auction would reach the heady heights of the last one, the 3G sell-off in 1999 when operators fell over themselves to spend more than £22bn on half the quantity of spectrum - radio waves aren't worth what they once were - but five billion quid would have suited the Exchequer well.
The breakdown of auction bids is as follows, according to Ofcom:
|Mobile operator||Radio frequencies nabbed||Wonga paid|
|EE||2 x 5MHz of 800MHz and
2 x 35MHz of 2.6GHz
|Hutchison 3G UK Ltd (Three)||2 x 5MHz of 800MHz||£225,000,000|
|Niche Spectrum Ventures
(a subsidiary of BT)
|2 x 15MHz of 2.6GHz and
1 x 20MHz of 2.6GHz (unpaired)
|Telefónica UK Ltd||2 x 10MHz of 800MHz
(coverage obligation lot)
|Vodafone Ltd||2 x 10MHz of 800MHz,
2 x 20MHz of 2.6GHz and
1 x 25MHz of 2.6GHz (unpaired)
Not that it's about money, as Ofcom always likes to remind us: the auction process is used on the premise that he who pays the most has the most incentive to use the bands effectively. So, we're told, the quantity of money is irrelevant and may in fact benefit consumers as the operators will want to spend more cash on infrastructure, assuming they've not blown it all on 4G licences. ®
Re: Coverage obligation chunk worth more than expected
LTE supports scalable carrier bandwidths up to 20MHz in size. Performance is best if you have 2x20MHz to use, but generally, wider contiguous chunks of spectrum are better than narrower chunks, or the same amount of spectrum made up of non-contiguous chunks. (If you look at all the trading of spectrum that has been going on in the US, a lot of it is about trading non-contiguous spectrum allocations in order to get wider ones). It was clear from what they were saying that Vodafone wanted one of the 2x10MHz allocations at 800MHz, and that they were willing to pay over the odds for it. That they wanted 2x20MHz at 2.6GHz for maximum performance in cities is not surprising either. It's pretty clear though that Vodafone's engineers told the management to get the widest possible allocation that they could at 800MHz and to get the maximum 2x20MHz that can be used by an LTE carrier at 2.6GHz, and they did.
I am not sure how wide the carriers EE are using at 1800MHz are, but they certainly have enough spectrum to use 2x20MHz at some point if they want to. Plus they now have the ability to do the same thing at 2.6GHz if they want to at some point in the future.
Three have presumably decided that using 1800MHz is preferable to 2.6GHz for a variety of reasons, and that 2x15MHz there (along with support from 2x5MHz at 800MHz) will do. They are likely right, but I thought they might buy some spectrum at 2.6GHz as well to be on the safe side. They didn't, but they likely have enough.
I am very surprised that O2 only bought 2x10MHz though. Certainly they win the "Network most likely to have capacity constraints" title.
It will be interesting to see how this develops. In 3G, all five (and then four) networks had fairly similar spectrum allocations to work with. For 4G, there are now vast differences.
"However if you or anyone you know uses the education system, the heath system, the road system, etc. etc. you'd realise that your tax spend does more work for your benefit then any other pound you spend."
Utter drivel. The roads I drive on are potholed and congested because of the circa £35bn raised in roads taxes, barely one quid in six is actually spent on roads. I've recently opted to take my son out of the state system and pay for his education because he simply isn't being given an adequate education. I don't want to pay a five figure sum for his education, when the bunglers of government are already taking the money off me for an education service, but I'm not prepared to compromise his chances with the shoddy state education, which in my area has been a poor performing LEA for at least the last two decades. And my local hospital has such appalling care that it recently starved an elderly patient to death. So far from being "neoliberal nonsense", it's actually based on my experience of the shitty "public services" that I'm forced to pay for, but which if there were a choice I simply wouldn't pay for. So fuck off and fill your boots with all those lovely, lovely "public services", because you're welcome to them.
And capitalism a product of well regulated big government? What shite. Public spending has never been higher than when that pair of traiterous idiots Blair and Brown failed to regulate themselves (doubling the national debt) or the banks (leading to the financial crisis). How much more "big government" do you want?
In your weak understanding of economics you quote Greece and Germany, failing to understand that the German economy benefits from an undervalued exchange rate precisely because the Greek economy suffers from too high an exchange rate. if you're not clever enough to understand such basic finance, then maybe that's why you believe in big government.
And finally, "and to price cap - which of course will never happen and whih I assume you would never want to see". You presume to put words in my mouth? Why bother with debate when you're so fucking clever that you can mind read?
Re: Cheap contracts then? Oh no, wait..
The cellco's still need to build out the hardware to implement 4G, that's far from free. It's probably the most expensive part of the process, and blowing huge wads of cash on the original 3G licensed probably slowed the rollout of actual 3G base stations considerably.